Chair and CEO message
2015–16 was another busy year for the CCMC as it worked to monitor the Code, at the same time preparing for periodic reviews of both the Code and the CCMC’s own operations.
Banks reported 21% more breaches than last year and an increase in significant breaches. Banks have somewhat different approaches to breach reporting and the CCMC are working with banks to address this. Of the thirteen Code subscribing banks, nine banks reported an increase in breaches and four reported a decrease. The CCMC believe that banks have improved their internal monitoring and processes for identifying and reporting breaches of the Code and that this partly explains the increase in breaches reported.
Code breach reporting is, however, only one aspect of Code compliance. Banks must use their breach identification to drive improvements to processes and procedures, ultimately providing a better service to customers. Where a bank has ongoing year-on-year increases in breaches of a particular Code clause, the CCMC will discuss with the bank what steps it is taking to rectify non-compliance and better its customer service. Improving standards of practice is a key commitment of Code-subscribing banks and the fundamental purpose of the Code.
The CCMC regularly conducts ‘deep dives’ into specific areas of Code compliance in the form of Own Motion Inquiries. In 2015–16, the CCMC completed and published its well-received report on compliance with the financial difficulty provisions of the Code.
The trends in both consumer Code breach allegations and self-reported breaches over recent years alerted the CCMC to compliance risk with regard to the Code’s provision of credit obligations. The CCMC responded with an Own Motion Inquiry into banks’ compliance with these obligations. Using the comprehensive information provided by banks, the CCMC has assessed current compliance. A report on the OMI will be issued in December 2016. The CCMC thanks banks for their active cooperation with this major inquiry into a key Code commitment.
Contrasting with the increase in self-reported breaches, the CCMC in 2015–16 saw a drop in the number of Code breach allegations it received. The CCMC conducts an engagement program in an effort to raise awareness. In the coming year, the Committee encourages banks and the ABA to contribute to this awareness by highlighting to both individual and particularly small business customers their right to refer matters to the CCMC.
On 26 April 2016, the ABA announced a review of the Code. This review requires the CCMC to arrange a parallel review of its own activities as the independent Code monitor. Performance and governance specialist Phil Khoury has been appointed to conduct both reviews.
Drawing on a deep understanding of the Code and its operation in practice, the CCMC made a submission to the review of the Code, identifying areas for potential improvement. The Committee also conducted a self-assessment ahead of the review of the CCMC. This review of the CCMC will assess the Committee’s performance against the requirements in its mandate, taking into consideration its investigative, monitoring and stakeholder engagement work alongside the governance arrangements it has established. The CCMC looks forward to receiving Mr Khoury’s report by the end of 2016.
Signalling that the Code and the CCMC are an increasingly important part of the regulatory landscape, during the year the Committee was invited to make a submission and appear before a public hearing of the Parliamentary Joint Committee on Corporations and Financial Services’ inquiry into the impairment of customer loans. The CCMC Independent Chair, the CEO and the Compliance Manager advised the Parliamentary Joint Committee of the Code’s unique small business protections, which exceed legislated minimum standards, highlighting the Code’s role in promoting a higher standard of service in the banking industry.
This year, the CCMC’s Banking Industry Representative, Sharon Projekt, and Consumer and Small Business Representative, Gordon Renouf, continued their valuable contributions to Committee discussions and activities, offering special insights from their respective sectors.
In meeting its work plan objectives for 2015–16, the CCMC has again relied on the support of its Secretariat, led by Sally Davis. In her first full year as Chief Executive Officer, Sally has built a productive relationship with the CCMC and its stakeholders. The work of the Secretariat has been crucial to the CCMC’s successes this year, and the Committee thanks the staff for their important contributions.
Looking ahead to 2016–17, the CCMC’s work will be shaped, in part, by the outcomes of the current reviews of the Code and the Committee. While it will be business as usual for CCMC monitoring and investigations, the Committee will also have to work to respond to and implement approved review recommendations and work with banks as they develop their processes and procedures for the transition to a revised Code. The CCMC looks forward to tackling these new challenges.